PRA has published a supervisory statement (SS) and policy statement, relevant to all Solvency II firms, on dealing with a market turning event in the general insurance sector. The statements follow responses to an earlier consultation paper and an industry-sponsored dry-run exercise of a catastrophic loss event.
The SS is aimed at Solvency 2 firms in the London Market, whose business models are exposed to low-probability, high-severity catastrophe risks. The SS sets out the PRA’s expectations of how such firms might prepare for and respond to a major general insurance loss event, which might affect their solvency and future business plans, and explains how the PRA expects firms to interact with the PRA on these issues.
The SS also provides responses to recommendations made to the PRA set out in an industry White Paper in January 2017.